NASHVILLE — Legislative leaders agreed Monday to take an additional $52.6 million from state reserve funds to provide a $400 one-time payment to tens of thousands of state workers, teachers and higher education employees as well as protect state contributions to 401(k) retirement plans.
The move came as lawmakers scrambled to put finishing touches on a 2008-09 spending plan that slashes $468 million from Gov. Phil Bredesen’s originally proposed $27.88 billion budget.
While the Democratic-controlled House and Senate Republicans, who control key committees, appeared to be largely in agreement on budget issues, they labored to overcome differences on how to spend lottery surpluses for college scholarships and a proposed K-12 energy efficiency program.
“I feel pretty confident that we’re going to come out with something,” House Speaker Jimmy Naifeh, D-Covington, said of lottery issues.
Senate Education Committee Chairman Jamie Woodson, R-Knoxville, said both sides are “trying to get the numbers resolved in a way that meets both our goals, one that helps the students ... and is fiscally in balance.”
Evening work
House and Senate Finance Committee members continued working into Monday evening to complete the appropriations bill and have it ready for lawmakers to consider on the two chambers’ floors by today so the General Assembly can bring its session to a close.
Earlier Monday, Finance Commissioner Dave Goetz provided new details on a voluntary buyout package for 2,011 employees Gov. Phil Bredesen says he must cut to bring his spending plan into balance.
The packages will range from $23,459 to $46,132 in cash and other incentives depending on an employee’s years of state service.
State Treasurer Dale Sims told House Finance Committee members that he believes the buyout offers “are going to be successful.”
Gov. Bredesen has said the state would have to begin laying off workers this summer beginning Aug. 4 if not enough employees accept the offers.
But House Speaker Naifeh announced that Gov. Bredesen has agreed to a delay in any layoffs until Jan. 1 when lawmakers returns to Nashville for the 2009 legislative session.
The buyout proposal is meant to save about $64 million annually. Some $50 million in one-time money from state reserves would be used to create the buyout packages.
“This represents our best thoughts so far on how the voluntary buyout, voluntary separation plan can be carried forward,” Mr. Goetz said. “This is a work in progress.”
Proving $400 bonuses to remaining employees in a year where there will be no regular salary increases will cost another $48 million in one-time money. The 401(k) provision will cost about $4.6 million.
The money will come from dozens of reserve accounts, but lawmakers hope to avoid pulling money from the state’s main $750 million rainy day fund and some $550 million in TennCare reserves.
Bonus debate
In comments made later to reporters, Speaker Naifeh broadly hinted that Gov. Bredesen didn’t like the idea of the one-time “bonuses” but would go along with it.
“The governor has accepted that it is a legislative initiative on the bonuses,” Speaker Naifeh said. “That’s not to say he is for that.”
Senate Finance Committee Chairman Randy McNally, R-Oak Ridge, said, “I don’t like dipping into reserves. But at the same time we’re not giving our state employees a raise; we’re increasing the costs of their health insurance; we’re increasing their deductibles.”
In light of that, the chairman said, “I feel that a one-time bonus for state employees and teachers would be something I could support.”
Mr. Goetz said of the bonus: “That’s what the legislature wants to do. It would come from reserves. We will do what they wish. What I’m unclear on is how far we go down in reserves.”
Rep. Tommie Brown, D-Chattanooga, a House Finance Committee member, said the problem all along with the governor’s employee reduction package was details.
“The devil’s in the details,” she said.
Last week, lawmakers’ efforts to finish their annual business were blocked by a group of House Democrats concerned about the buyout.
“It raised my comfort level,” Rep. Brown said of the new details and safeguards proposed by Speaker Naifeh.
Tennessee State Employees Association President Zoyle Jones characterized the buyout offer as “generous,” but TSEA officials said they still have concerns.
In order to ensure the state gets 2,000 volunteers for buyouts, the state will have to offer buyouts to between 8,000 and 12,000 employees officials said. All would involved positions the state would abolish once they become vacant.
“We just want to make sure the selection method is fair and equitable,” TSEA Executive Director Jim Tucker said of the 2,011 employees who eventually will leave.
Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...
